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never [62]
3 years ago
5

Manufacturer A has a profit margin of 2.0%, an asset turnover of 1.7 and an equity multiplier of 4.9. Manufacturer B has a profi

t margin of 2.3%, an asset turnover of 1.1 and an equity multiplier of 4.7. How much asset turnover should manufacturer B have to match manufacturer A's ROE?
Business
1 answer:
maksim [4K]3 years ago
6 0

Answer:

1.54

Explanation:

As we know that

The DuPont Analysis is

ROE = Profit margin × Total assets turnover × Equity multiplier

So we considered this formula for Manufacturer A and Manufactured B

Profit margin × Total assets turnover × Equity multiplier =  Profit margin × Total assets turnover × Equity multiplier

2.0% × 1.7 × 4.9 = 2.3% × Asset turnover × 4.7

16.66% = 10.81% × Asset turnover

So, the asset turnover is 1.54

We equate this formula for both Manufactured A and manufactured B

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Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annua
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Answer:

The current price of the bond would be € 898.87

Explanation:

Hi, we need to bring to present value the coupon payments and also the face value of the coupon in order to find the price of this bond, that can be done by using the following formula.

Price=\frac{Coupon((1+Yield)^{n}-1) }{Yield(1+Yield)^{n} } +\frac{FaceValue}{(1+Yield)^{n} }

Where:

Coupon = 1,000*0.078=78

Yield = 0.089 (or 8.9%)

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So, everything should look like this.

Price=\frac{78((1+0.089)^{20}-1) }{0.089(1+0.089)^{20} } +\frac{1,000}{(1+0.089)^{20} }

Price=717.13+181.74=898.87

Therefore, the price of this bond is € 898.87

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7 0
2 years ago
On January 1, 2010, Sunshine company issues bonds maturing in 10 years. The par value of the bonds is $500,000, the annual coupo
zheka24 [161]

Answer and Explanation:

a. The bonds is issued at a discount, since the coupon rate is lower than the interest rate on the market.

b. Par value = $500,000.

Annual coupon = Par value of bonds × Coupon rate

= $500,000 × 4 %

= $20,000

Interest rate = 6%

n = 10

Present value of an annuity 6%, n = 10 = ((1 - ( 1 ÷ 1.06 ) × 10) ÷ 0.06)

= 7.3601

Present value 6%, n = 10 = (1 ÷ 1.06) × 10

= 0.5584

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= $20,000 × 7.3601 + $500,000 × 0.5584

= $147,202 + $279,200

= $426,402

3.The Journal entry is shown below:-

Cash Dr, 426,402  

     To Discount on Bonds Payable $73,598  

      To Bonds Payable $500,000

Being cash is recorded)

4. Interest expense for the year ended December 31, 2010 = Issue price of the bonds × Interest rate

= $426,402 × 7%

= $29,848.14

5. The Journal entry is shown below:-

Interest Expense Dr, 29,848  

Discount on Bonds Payable Dr, 9,848  

      To Cash $20,000

(Being interest expenses is recorded)

6. Over the years the interest rate would rise as the bonds were issued at a discount.

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